Quo Vadis European Aviation?

Routes Europe 2015 officially opened in Aberdeen, Scotland yesterday with the hard-hitting Strategy Summit. The packed audience at the Aberdeen Exhibition & Conference Centre, Scotland, followed an engaging and thought-provoking discussion on the changing skies of Europe.

John Grant, executive vice president data and market intelligence for schedules specialist, OAG, set the scene by highlighting that in the last five years Europe has already 'lost' over 70 scheduled airlines with numbers declining from 241 in 2011 to 168 in 2015. If that trend were to be extrapolated, there would be no European-based airlines in 25 years.

He also revealed that Turkey's domestic market is now home to three of the four largest intra-European routes. While Turkey, Poland and Russia have seen fast growth over the past five years, capacity in countries such as Spain and Italy has declined considerably.

The Summit provided firm evidence on the key role that low-fare carriers continue to play in this part of the world and how the legacy airlines are working to compete with the expanding rivals. The region's big two low-fare carriers, easyJet and Ryanair, will command an estimated 35 per cent share of the intra-Europe market by 2024, up from the current 22 per cent and the legacy airlines are making bold moves to compete and shifting flights and the airlines that are operating them.

Continuing a theme from Routes Americas last February, there was a lively debate on how the Gulf carriers are influencing the market both through acquisitions and growing network capacity. The skies of Europe may be more turbulent ahead, as the new battle lines of competition and cooperation are drawn up.

Against this challenging backdrop, the European Commission is currently drafting a new aviation strategy for Europe, which is expected to come out in late 2015, while Germany is also in the process of drafting a new aviation strategy. Both documents will focus on the competitive situation of the sector and of European airlines in particular. The fact that the UK, Europe's largest aviation market, does not have an aviation strategy was called a "shambles" by Jochen Schnadt, Managing Director at Latitude Aviation.

Regardless of governments' strategic considerations, a route down the consolidation path has already started with legacy flag carriers coming together and even low-cost and regional airlines joining together through takeovers and mergers. However, is consolidation the right way to move forward in Europe? Not according to Peter Morris, chief economist at Ascend and other delegates during the afternoon's second Strategy Summit panel session: "If you wanted to breed a racehorse, you are probably not going to take two dinosaurs to start you breeding programme," offered Morris as an analogy for the European airline sector.

According to Simon McNamara, director general, European Regions Airlines Association (ERAA), one of the biggest challenges the aviation sector will face in regards to investment decisions is attracting capital, finance and investors due to current restrictions. "Attracting finance to the European industry is very, very difficult," he said. "We have some quite closed rules in Europe when it comes to foreign investment especially - a limit of 49 per cent by foreign companies in European airlines and no effective control."

"It is a source of problems for the future attracting that investment to European carriers because there is not a big bunch of people out there wanting to give money to the industry which needs capital, particularly the airline business," he added.

Commenting on the Strategy Summit, Mike Miller, Routes' Head of Content and Industry Relations, said: "It's great to see the defining issues for aviation being debated with enthusiasm at Routes Europe. Europe's skies are changing fast in more ways than one, from the march of the low-cost carriers to the rise of Turkish and Middle Eastern airlines and the global open skies vs. fair skies debate. The significant interest of airlines and airports in these discussions highlights how crucial these issues are for the aviation industry right now."

Routes Europe 2015, the leading route development event in Europe, opened on 12 April with 1,200 delegates to discuss where airlines will fly in the future. One of the largest civil aviation events of the year, Routes Europe brings together around 350 airports, 100 airlines and 45 tourism authorities as well as high-level policy-makers and aviation stakeholders to develop new air services to, from and within Europe. All of Europe's major network and low-cost carriers are in attendance as well as leading global airlines such as Etihad Airways and China Southern.

Notes to Editors

About Routes

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Routes was founded in 1995 as part of the Manchester UK-based ASM Ltd., a consultancy specialising in the field of route development for airports. http://www.asm-global.com. Routes and ASM are part of the UBM EMEA division of UBM plc.

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